Congress weighs safegaurd for US service industries
US service industries -- which account for 70 percent of all American jobs and 60 percent of the nation's gross national product -- will be given some attention they welcome at hearings this week before a key US Senate committee.
At issue in the proceedings before the Senate Commerce Committee Sept. 24 and 25will be to what extent the United States should adopt a coordinated national policy regarding its service industries.
Service industries -- among the most profitable in the giant US economy -- include banking, shipping, insurance, transportation, travel and tourism, and entertainment, and communications. With the exception of the US merchant fleet, the great bulk of these industries have no protection from foreign competition. By contrast, most major Western industrial competitors of the US are increasingly erecting protectionist restraints around their service industries, to the disadvantage of the US.
This probelem for the US industries -- particularly such major financial enterprise as insurance, the motion picture industry, and insurance, the motion picture industry, and construction engineering firms --is shown in two recent studies:
* A US Commerce Department report, released in March, points out that despite the apparent statistical success of US service companies abroad (as measured in sheer numbers), several of them were being severely pummeled by protectionist pressures abroad.
* In August, a staff study of the World Bank concluded that most industrial nations are putting up protectionist barriers around their various service industries. The world Bank study concludes that the phenomenon is a new and disturbing element in foreign trade.
American service industries, according to Sen. Daniel K. Inouye (D) of Hawaii , are lacking any type of "national policy." What national objectives or policies do exist, he says, are "uncoordinated" and spread out within differing federal agencies.
Moreover, according to the senator, who is heading up this week's Commerce Committee hearings, the US has not yet established an adequate statistics-gathering program on the industries. The current data, now collected by the Commerce Department's Bureau of Economic Analysis, are considered only fragmentary.
Although largely unkown to most Americans, service industries account for the lion's share of total US nonagricultural exports. Last year, for example, US service-company exports reached $36 billion.These will climb to around $45 billion for this year.
During the past decade, moreover, the world market for services grew at an annual rate double that for general merchandise trade. Yet, within recent years the US percentage of total world service trade has been shrinking -- from close to 24 percent of the total in 1974 to an estimated 20 to 21 percent in 1980.
Perhaps underscoring the present lack of national policy is the fact that 80 percent of all export promotion funds now spent by the US Commerce Department go to 15 basic industries. Not one of them is a service company.
According to Harry L. Freeman, senior vice-president of American Express Company, a witness before the Senate hearings, US service companies are facing major problems vis-a-vis of overseas competitors.
Analysts like Mr. Freeman object to a lavish government subsidies on the part of such nations as Japan, France, and the United Kingdom. They also complain that the US government taxes the incomes of Americans living abroad. Most other industrial nations do not tax the foreign earnings of their citizens.
In addition, many industrial nations, as well as less-developed countries, are starting to impose legal restraints on service industry imports, ranging from licensing barriers to quotas and preferential shipping requirements. The upshot is to restrict US access to their local economies.
What then can the US do to fafeguard its ownn service industries, short of retaliatory measures?
Congress, for its part, is already studying whether to modify its tax policies regarding overseas earnings. But no legislative action is anticipated in the near future on this matter.
Senator Inouye is proposing legislation that would direct the president to coordinate all US government policies regarding service firms. His bill would designate the Commerce Department as the "lead agency" in administering a national export policy on these firms.
As is the case with the tax hearings, however, legislative action is a long way down the road. In the meantime, the lucrative service industries of the US believed to be in a very vulnerable period.